Sino-US wind subsidy agreement gets off to a rocky start

The China Ming Yang Wind Power Group has announced that it has entered into a "strategic framework co-operation agreement" with the Municipal government of Ganzhou, the second largest city of China's Jiangxi Province, to operate wind farms and get preferential access to rare earth metals.

Under the agreement Ming Yang Wind, which is listed in New York, will get priority over the region's rare earth resources, get exclusive rights to operate wind farms in Ganzhou and get priority for the use of its wind turbines in Jiangxi province.

This comes about a week since it and the US announced they had settled a green technology trade dispute which narrowly avoided having to go to the World Trade Organisation (WTO).

Proclaimed as a victory for Presidenat Obama, it is likely that United Steelworkers union will resurrect its detailed list of complaints that China has been developing its renewable energy business at the expense of competition.

Specifically it was alleged that renewable energy businesses had access to state bank money under terms and conditions more akin to grants than loans, that foreign companies were pushed out of deals because of a 'Buy China' policy and a list of other factors that would be considered WTO violations.

To add insult to the US injury, under the new agreement the Ganzhou government grants Ming Yang the right to invest, as the promoter, in Ganzhou Rare Earth Mineral Industry Group. This state-owned company was formed by Ganzhou municipal government with rare earth resources development rights in eight counties in Ganzhou.

Access to rare earth metals is also a serious international political football with China having restricted exports, officially to protect global resources since it now accounts for 95 percent of global production, but coincidentally the same metals are critical in the manufacture of a host of cleantech products ranging from wind turbines to new battery technologies.

In an official company statement Zhang Chuanwei, chairman and CEO of Ming Yang said, "Building a wind power upstream supply chain is a core part of Ming Yang's strategic development at this stage. The strategic co-operation with the municipal government of Ganzhou will allow the Company to be the first Chinese wind turbine manufacturer to gain access to rare earth resources, which will enable the Company to accomplish the strategic goal to develop permanent magnetic generators for high-capacity WTGs.

"This is also imperative to the production of the core components of SCD WTGs and the optimization of cost. Ming Yang will continue to expand in upstream supply chain, to further enhance the Company's integrated capabilities in the wind turbine core component supply chain. We believe solid execution of this strategy will enhance our profitability, and help further expand our market share."